Digital Car – Sitting ducks pt. II

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The best automotive infotainment unit is the one in my pocket

• A car maker with a future is a car maker that realises how vital its data is and pays the buyers of its vehicles for the right to use it.
• This also has the added benefit of creating a relationship with the buyer of the vehicle which is something car companies have not really bothered with to date.
• The latest survey from IHS examines the technology that consumers are and are not willing to pay for when they buy a new vehicle (see here).
• The data shows that consumers across the world are most willing to pay for a sunroof and rear seat entertainment systems with things like telematics and in-car Wi-Fi trailing significantly.
• The survey also revealed that consumers expect technology in vehicles to evolve as quickly as it does in mobile devices.
• This creates an enormous problem for an industry with a 4 to 5 year design cycle where even the top end infotainment systems costing thousands of dollars are using hardware that is 5 years out of date.
• The result is that they can be outperformed by a $150 Android device.
• This means that the user is likely to have a better digital experience in a top of the range vehicle with a cheap smartphone rather than with the infotainment unit.
• This strongly encourages the user to access his Digital Life with his smartphone in the vehicle rather than to use the infotainment unit.
• This is the last thing every car maker needs.
• Users still buy cars based on performance, form factor, safety and economy but increasingly digital services will play a part in the user’s decision of which car he buys.
• If the infotainment unit is not being used and everything is being done on a smartphone then the digital battle will have already been lost and cars will have moved closer to being commodities.

• Furthermore, I think that the automotive industry has its strategy with regard to telematics completely back to front.
• Instead of forcing users to pay for telematics, they should be giving users a discount or free services for agreeing to grant access to the data that these systems generate.
• Using digital ecosystems as a benchmark, I think that car companies could give users meaningful discounts on the price of the vehicle and still end up with higher revenues and margins.
• This is because the data that these vehicles generate could be very valuable to other companies who provide services based on collecting data.
• For example, using cars as weather or traffic probes would cut down on the need to install expensive infrastructure.
• However, to be valuable, all cars need to be generating this data and while car makers continue to charge users for this feature, penetration will remain low leaving the door open for disruptors.
• One only has to delve very briefly into the world of start-ups to see this disruption coming.
• For example, many start-ups are providing their automotive related digital services on smartphones and not infotainment units and there is significant development of technology that could by-pass the car companies entirely.
• For example, a quick tour of the automotive section of a technology trade show revealed two companies that use vibration to work out exactly what is happening within the vehicle rather than use the traditional sensors.
• One of these claimed that it could, using 10 vibration sensors on a helicopter, completely replace the 160 sensors currently being used.
• This data could easily be relayed to a smartphone app and cut the car companies out from the only data source which remains proprietary to them.
• I found these start-ups on the stands of the very companies which they intend to disrupt, further reinforcing my opinion that most of the automotive industry still has its head in the sand.
• Instead automakers should be aggressively moving to obviate the reason to be bypassed by making their infotainment units and sensor data easy to use and readily available with simple APIs.
• Currently, by far the best infotainment unit I have is the one that is in my pocket which is further enhanced because I can use it in any vehicle (including trains and planes).
• While, this reality persists, the automotive industry remains a sitting duck for the ecosystem companies who have long understood the value of that which the car industry seems to ignore.

• RFM would like to acknowledge John Ellis of Ellis and Associates which was the starting point for some of the views presented here (see here).